I haven't actually been to this island yet but I have looked into going there as well. Here are some of the sites I liked:

www.hvar-travel.com

It looks like you can choose from quite a wide variety of accommodation types, luxury, villas, or apartments by the sea. Here is another site I found to be pretty good- their prices are decent, and they have some other good options like houses that aren't too expensive:

If you want to go to Hvar you will catch ferry in Split. From Split you can go to Brac, Hvar, Vis, Solta, Korcula... If you decide to stay in Split you can find accomodation, apartments or rooms on this page: www.apartments-split-croatia.net

Here's an agency that has very affordable prices: http://kroatienbilliger.de/ They speak very good english and have beautiful apartments.
I booked with them last summer and had a great time. The apartments were very clean, in a nice neighborhood, with beautiful beaches, perfect for children etc...
Hope this helps

Dear Visitors and TravelersWe offer cheap short or long holiday rentals in SPLIT, 40 PETROVA St.,Croatia,in the heart of city centre as Registered and licensed Provider and other several city locations. Double room FROM 21GBP per day!!! 200metres FROM BLUE FLAG BEACH !

I would recommend the town called Primoten situated in the middle of Dalmacia near ibenik. It is very nice and clean town with cheap accomodation prices. The amazing thing of all is that there is the most clear sea water I've ever seen on Adriatic coast. There is also old town on small peninsula as a part of Primoten and it is connected only with stone bridge. Food in restourants is exellent. Really nice destination to visit!

Last summer we went to Croatia .The best plase for us was island of Korcula.Beautiful place to spend 3-4 days.We rented a nice apartment steps away from old town.The place is ROYAL APARTMENTS.Host Marija and Zvonko are the owners and they speek english.John BuffoneWoodbrige OntCanada

I have been to Croatia several times and enjoyed every single one. I went to Hvar in '09 and stayed in Stari Grad. Very calm and quite atmosphere, very different from Hvar town that at the time (not sure about now) was very trendy, full of discos and young people. I remember the seaside was fantastic and we had some really fantastic days swimming. I have been to several other places in Croatia so fell free to ask me. My favourite is Valun, a very small fishermen village (60 inhabitants) in the island of Cres. No cars, fantastic food, fantastic seaside. From my apartment I could see the sea and one morning whilst I was having breakfast I saw dolphins swimming in the bay.

You can check here for accommodation in Croatia. It is an agency that has very affordable prices (they work without commission, and you can send them request if you do not find accommodation you are looking for.